The answer is MONEY. 

Although it does reduce the premium slightly for that particular rating factor, it is not optional on the part of the HOA as an intentional cost saving measure.  

I would get rid of that immediately.Second, I would ensure your rules are clear, in writing, attached to the lease, and posted in locations where the occupants can't possibly miss them.

I'd like to use these to upgrade into something much larger in the next 2-4 years. 20+ units.

It protects the lenders security (i.e., the property) against claims which would reduce the value of their collateral.

Family services will inspect the home and limit occupancy based on the number of bedrooms.

Tell them what the courts decided on. 

@Gary R UrenIf the property is zoned for only one home you most likely will not be able to do thisPossibly it could be 123 main st unit a vs b but that is a post office issue and good luck dealing with the post office on this issueI would talk to them and put to mailboxes in the front and see if they can separate it by A and B unit

I get the gist of the seller financing thing. 

You can do it with putting in only the one rent you will actually connect.